Continued strong growth and profitability in second quarter
Second quarter 2017
- Sales volume increased to 98.7 ktonnes (46.5) and net sales was SEK 3,081 million (1,442). Excluding the acquired business in the US, sales volume increased by 6.2%.
- Adjusted operating profit increased by 61.6% to SEK 290 million (179), corresponding to an adjusted operating margin of 9.4% (12.4). Excluding the acquired business, adjusted operating profit rose 10.6% to SEK 193 million.
- Operating profit rose to SEK 290 million (154).
- Profit for the period increased to SEK 192 million (114).
- Diluted earnings per share rose to SEK 2.55 (1.52).
- Cash flow before financing activities increased to SEK 307 million (157).
First half-year 2017
- Sales volume increased to 193.5 ktonnes (91.6) and net sales was SEK 5,973 million (2,802). Excluding the acquired business in the US, sales volume increased by 6.6%.
- Adjusted operating profit increased by 57.5% to SEK 527 million (335), corresponding to an adjusted operating margin of 8.8% (11.9). Excluding the acquired business, adjusted operating profit rose 9.1% to SEK 365 million.
- Operating profit rose to SEK 527 million (309).
- Profit for the period increased to SEK 349 million (208).
- Diluted earnings per share rose to SEK 4.63 (2.78).
- Cash flow before financing activities increased to SEK 382 million (135).
- Net debt amounted to SEK 2,481 million at 30 June 2017 (SEK 2,722 million at 31 December 2016), corresponding to 1.9 times adjusted EBITDA1 (2.1 times at 31 December 2016).
Comments from Gränges CEO Johan Menckel:
The positive trend that we saw in the beginning of 2017 continued throughout the second quarter, that turned out to be Gränges’ strongest quarter to date. Sales volume increased to 98.7 ktonnes (46.5), thanks to strong sales in all regions, and adjusted operating profit increased to SEK 290 million (179). In operational terms, the business performed very well and we have achieved high product quality and good metal management at all our plants in the quarter. We also recorded a strong cash flow and by the end of June our net debt was back in target range of 1–2 times EBITDA.
In Asia, sales volume increased by 9.4 per cent, driven primarily by a strong development in China. Demand for larger cars of SUV model continues to be high. Sales to commercial vehicles also increased in the quarter. In Europe, sales of heat exchanger materials exceeded market growth in second quarter. Sales of non-heat exchanger products were also higher than last year and in total, sales volume in Europe was 5.7 per cent higher in the quarter. In the Americas, we continued to see good growth fuelled by strong sales of heat exchanger materials to stationary applications while sales to the automotive industry remained stable. In the US, we have successfully released some extra production capacity to meet some of the higher customer demand.
Increased investment in research and innovation
Research and innovation is a core element of Gränges’ strategy, and we are further increasing our efforts in this area. To support this initiative Kent Schölin, former President of Gränges Europe, has been appointed SVP Research & Innovation. This move increases our focus on research and innovation at group management level and allows us to better support our global customers in product development for future applications, such as electrical vehicles. Gränges views the global trend with increased electrification as positive. In June, we inaugurated our global centre for Research & Innovation in Finspång, marking an important step on this journey.
The market for heat exchanger materials for the automotive industry is expected to grow in 2017. The market research firm IHS forecasts that production of light vehicles will increase by 1.8 per cent in full-year 2017. In the third quarter, an increase of 2.5 per cent is expected, according to IHS.
We expect a growth in line with or slightly below the anticipated market growth in Asia and in Europe in the third quarter. In the Americas, a growth slightly above the market is anticipated for the third quarter for automotive heat exchanger materials. For the business we acquired last year, we expect a growth in the third quarter.
During 2017, we will continue to work according to our strategic plan. This includes increased focus on customer offerings and innovations, sustainability, and ensuring that we have both the capacity and capability of our facilities to meet the demand of our customers. The feasibility study to determine further investments in the US as well as in Asia is running according to plan. We are optimistic about 2017 and are determined to continue to grow with sustainable profitability in the coming years.
Webcasted telephone conference
CEO Johan Menckel and CFO Oskar Hellström will present Gränges’ half-year report for January–June 2017 at a webcasted conference call at CET 10.00, Thursday 20 July, 2017.
The webcast can be viewed on here. To participate in the telephone conference, please call +46 856 642 661 (Sweden), +44 203 194 0544 (UK) or +1 855 269 2604 (USA). Please call a few minutes before the telephone conference starts. The presentation will be in English.
For additional information, please contact:
Pernilla Grennfelt, SVP Communications and Investor Relations
Telephone +46 (0) 702 90 99 55
The information in this report is such that Gränges must disclose pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, on Thursday 20 July 2017 at 07.30 CET.
Gränges is a global leader in aluminium engineering, manufacturing and innovation. We focus on rolled aluminiumproducts for heat exchangers and selected niche applications. In materials for brazed heat exchangers, Gränges is the global leader with a market share of approximately 20%.
Its production facilities are located in Sweden, China and the United States, and have a combined annual capacity of 400,000 metric tonnes. Gränges has some 1,600 employees and net sales of more than SEK 10 billion. The share is listed on Nasdaq Stockholm. More information on Gränges is available at granges.com.